Tag: financial crises

Lewis,once again, does a great job on explaining the financial crisis of 2008. In “Boomerang” he does something different (at least different from his other two books I’ve read- “Liar’s Poker” and “The Big Short”). He explores the crisis of other, very unique countries.

Now, if you’re like me, you assumed that the crisis might have happened or came about in a similar way and of similar attitudes as the American Culture. Like, I thought it happened because people became greedy, self-absorbed, blind, and naive all for money and they idea that it results in happiness and his a measure of success.

This is not the case from some of the countries that were heavily impacted by the sub-prime crisis. The only way I can describe this is that Lewis narrates people who act like their country and country that act like their people. It is the culture that is within the country, that brought about major financial disaster.

For example, and I won’t give too much a way, Iceland lost big time primarily because they simply were not a people of bankers (despite how much they thought themselves to be). They did not belong, and therefore, from the start were destined to fail.

All the countries that he explores fail for their own cultural behavior.

At the end of the day, his overall point is that if we want make a better the economy of the nation we live in, we need to focus of the the culture that masks it.

I so strongly agree with this point. Certain cities a California have filde for bankruptcy or on the verge of doing so. So people of those cities still refuse to increase taxes. Lewis points out that some places were given the opportunity to BEFORE things started to get bad, but at a time when they were projected to hit that particularly city bad soon, people still wanted to spend way beyond their means.

I think people are so stuck in their ways that they are still in denial about the amount of debt that we are in. Because there are government bailouts (And, I do think they were necessary) they permit people to think that even while at the edge of the cliff, even as they job, there will be some how this magical bungee rope that will save them from that fall… I think I will expand on this idea further in a different post.

Overall, great and easy read. He does an amazing job of taking us into the mindest of of other cultures while maintaining the simplicity in which he explains the complex financial meltdowns (although if you’ve read his other books, even the financial part is easy because it is more or less the same).

While I understand the debate of which literary works should and shoud not be taught in public schools is imporant, in this day and age, I think there should be emphasis on economics.

As an English major and Creative Writing minor, I’m all about litearture and reading. But Between the temporary scare of the fiscal cliff and the very slow recovery from the increase in in unemployment, the economy has our constant attention, or, at least it should. The main reason why 2008 financial crisis and subsequent recession occurred is because, well, no one (myself included), knew anything. We left it up to the big guys, who proved to be very small, sleazy, or both (with the exception of a few). My own neighbor, a 45 year old woman who reads an insane about of gossip magazine, hadn’t a clue of what a surplus or a deficit was. I mean, she knew in the sense that it could apply to her monthly bills, but hadn’t the technical terms to call it.

Daniel Hamermesh, an economist and professor at the University of Texas, titled his book “Economics is Everywhere.” Oh how true this is; we just aren’t educated enough on the subject area to realize it. Parents seem to be over worried that children are getting too much fantasy and not enough practical application of their studies. With economics, we could tie it to every day actions that a student can easily relate to. The purchasing of lunch is an example of something supplied because it was demanded by the student. Or, the changes in a bag of Doritos in a year is something that a student could notice but doesn’t realize the economic reasoning behind the fluctuation in prices. Or, that money is a medium of exchange. At some point in my distant past, I would have considered Yu-Gi-Oh cards a medium of exchange, at least for 90s kids. I could get anything I wanted with an Exodus, which would be the equivalent of a million dollars (think children like exaggeration). The idea that when supply goes down so prices raise the roof was evident to north eastern families as an effect of Hurricane Sandy. I pointed this out to my brother when we had to wake up at three o’clock in the morning, buy two batteries (not packs but single batteries) for $4 for our flashlight, then wait on line for three hours to see if we could get gas at a station we heard would get electricity (that never happened).

Basic economics is fairly practical and forever so constant that we should learn it pre-college. I stress this because not everyone goes to college, but most people, or at least more people go to high school than college (duh), so there’d be a wider audience. It should be a mandatory course not just optional, like English or basic algebra. I have a friend who did not take economics at all in high school (she doesn’t remember why), and another friend who too it because it was optional (it was that or Government). I say, no more choices. We need to better prepare Americans on what is going on.

Had friend number one taken economics and she were pointed to the unemployment rate and decrease in funding in higher education, then she might have thought twice about picking a school with such high tuition costs.

So when the next economic scare comes around (in late February) we would know or have some idea of what the journalist on CNN is talking about. There are a lot of people who get caught up in the hype and haven’t a shoe of what the fuss is about, let’s not make out children one of them.

This post was inspired by Daniel Hamermesh’s “Economics is Everywhere,” and Michael Lewis’ “Boomerang”, my current reads for the week.